What are ETFs and how do they trade?

What are ETFs and how do they trade?

Exchange Traded Funds (ETFs) are investment products that combine the diversification of mutual funds with the tradability of stocks. They are structured as baskets of securities—like indices, sectors, commodities, or bonds—and can be traded on stock exchanges during live market hours.

What is an ETF?

An ETF is a collection of securities (such as stocks, gold, or bonds) that is listed and traded on exchanges like NSE or BSE. Unlike mutual funds, which are transacted at a fixed NAV once a day, ETFs are bought and sold at market prices, which may differ from their NAV based on demand and supply.

ETFs can track:

  • Market indices (e.g., NIFTY 50, Sensex)
  • Sector-specific baskets (e.g., Banking, Pharma)
  • Commodities like gold
  • Debt portfolios (e.g., Government or Corporate Bonds)

How can I trade ETFs on FYERS?

  • You can place ETF orders between 9:15 AM and 3:30 PM on trading days.
  • They trade under the equity segment, similar to stocks.
  • Orders are settled in T+1, and ETF units will appear in your Holdings tab after settlement.

NAV vs Market Price – What’s the difference?

  • NAV (Net Asset Value): The fund’s actual value based on its underlying assets.
  • Market Price: The traded price on the stock exchange, which may vary slightly due to real-time market demand and supply.

ETFs may trade at a premium or discount to their NAV during the day.

What if…

ScenarioExplanation
I try to place an ETF order before 9:15 AMETF orders are only allowed between 9:15 AM and 3:30 PM on trading days.
I can’t find my ETF after purchaseThe ETF units will reflect under your Holdings tab after T+1 settlement.
I want to check live prices of ETFsSearch by ETF name or symbol on FYERS Web or App to view real-time prices.
Note: ETFs typically have lower expense ratios than actively managed mutual funds and allow intraday trading flexibility at real-time market prices.

Updated on: 28 Jun 2025